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Synopsis

The Supreme Court has said that the relinquishment of the claim to further performance of the remaining part of the contract and all rights to compensation can be made at any stage of litigation.

A bench of Justices J B Pardiwala and R Mahadevan rejected a petition against the judgment and order passed by the High Court of Judicature at Madras on March 24, 2023 in an appeal by which the High Court dismissed the appeal and thereby affirmed the judgment and decree passed by the District Judge of Nilgiris at Udhagamandalam in 2010 in original suit.

The petitioner (original plaintiff) Vijay Prabhu instituted the suit seeking specific performance of the agreement of November 07, 2005 and for delivery of possession of the suit property.

In the alternative, he prayed for Rs 60,00,000 with interest at 12 percent per annum towards the damages from the date of filing of the suit.

The trial court rejected the prayer for specific performance and directed that the amount of Rs 20,00,000 paid by the plaintiff to the defendants towards the earnest money be refunded with interest at 12 percent per annum.

The trial court recorded a finding that the plaintiff was not ready and willing to perform his part of the contract. Besides, the plaintiff had failed to plead and prove that he had suffered damages.

The counsel appearing for the petitioner (plaintiff) reiterated that his client was entitled to the benefit of the provisions of Section 12(3) of the Specific Relief Act and the high court had not appreciated this aspect of the matter in its true perspective.

Referring to Section 12 of the Act, the bench said the provision makes it clear that it is not open to the High Court to direct specific performance of a part of contract except otherwise provided in the section in absence of any of the exigencies available under the provisions of sub-sections (2), (3) and (4) of Section 12 so as to decree the suit.

"The words ‘unable to perform’ suggest that the sub-section is applicable only when the party cannot for any reason perform the whole of what he has promised. The inability may arise by any cause whatsoever including any statutory limitations," the bench said.

The inability to perform may arise by deficiency in quantity of the subject-matter, or variance in quality, or defect in title; or some legal prohibition; or other causes, the bench pointed out.

"The expression ‘considerable part’ implies that the part which will be left unperformed is either large as regards quantity or as regards quality," the bench said.

In other words, it is material and not insignificant, so that a reasonable objection can be taken by the promisee to accept performance. The phrase ‘does not admit of compensation’ implies that there is no data for ascertaining a fair and reasonable amount as the money value of the difference between what can be performed and the express subject-matter of the contract. The amount need not be mathematically accurate. If a reasonable estimate of the amount as the money value can be made, it will not be a case where the compensation is unascertainable, the court explained.

"The power to grant partial relief, from the very language of Section 12(3) of the Act is discretionary with the court to be exercised keeping in view the facts and circumstances of each case and the rights and interests of the parties involved. Section 12(3) of the Act can be invoked only where the terms of contract permit segregation of rights and interests of parties in the property," the bench said.

The court noted in view of the specific finding recorded by the courts below that the plaintiff was not ready and willing to perform his part of the contract and the plaintiff being in default he could not be said to be entitled to invoke Section 12(3) of the Act also.

In the case, the bench pointed out, the high court expressed doubt whether the plea as regards Section 12 of the Act if not raised before the trial court could have been raised for the first time before the high court in first appeal.

"In this context, we may only say that the relinquishment of claim to further performance of the remaining part of the contract and all rights to compensation can be made at any stage of litigation," the bench said.

Thus, the court said, the position of law was that relinquishment could be made at any stage of the litigation including the appellate stage. The claim of the plaintiff-appellant for grant of benefit under Section 12(3) of the Act was, therefore, rightly not rejected by the high court on the simple ground that it was not made at the trial stage and had been made for the first time at the appellate stage, court said.

"In our view the claim can also not be rejected on the short ground that it was not incorporated in the plaint or was not set forth in writing before the Trial Court," the bench said.

The court therefore held no error of law could be said to have been committed by the high court in passing the impugned order.

Dismissing the appeal, the court ordered, the amount of Rs.20,00,000, which came to be deposited by the defendants in the trial court in the form of refund of the earnest money to the original plaintiff must have been invested by the court concerned with any bank by way of fixed deposit receipt, the said amount should be refunded to the petitioner (original plaintiff) within a period of four weeks with the accumulated interest as awarded by the court below.

Case Title: Vijay Prabhu Vs S T Lajapathie & Ors